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    Targeted Price Controls on Supermarket Products
    15 Mar 2018Working Paper Summaries

    Targeted Price Controls on Supermarket Products

    by Alberto Cavallo and Diego Aparicio
    Governments sometimes consider targeted price controls when popular goods become less affordable. Looking at price controls in Argentina between 2007 and 2015, this study’s findings suggest that new technologies like mobile phones are allowing governments to better enforce targeted price control programs, but the impact of these policies on aggregate inflation is small and short-lived.
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    Author Abstract

    We study the impact of targeted price controls for supermarket products in Argentina from 2007 to 2015. Using web scraping, we collected daily prices for controlled and non-controlled goods and measured the differential effects on inflation, product availability, and price dispersion. We first show that, although price controls are imposed on goods with significant CPI weight, they have a temporary effect on aggregate inflation and no downward effect on other goods. Second, contrary to common beliefs, we find that controlled goods are consistently available for sale. Third, firms compensate for price controls by introducing new product varieties at higher prices. This behavior, which increases price dispersion within narrow categories, is consistent with a standard vertical differentiation model in the presence of price controls.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: February 2018
    • HBS Working Paper Number: NBER Working Paper Series, No. 24275
    • Faculty Unit(s): Business, Government and International Economy
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    Alberto F. Cavallo
    Alberto F. Cavallo
    Edgerley Family Associate Professor of Business Administration
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    • Price
    • Cost Management
    • Goods and Commodities
    • Food
    • Outcome or Result
    • Food and Beverage
    • Argentina

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